Welcome back class. I’m your substitute teacher for today. I hope you enjoyed A Matter of Trusts - Part 1. In Part 1 we talked about Grantor’s also known as Settlor, Creators or Trustors. In this article we will discuss the Trustee and their role. This post was inspired by the article “Why I am Not A Big Proponent of Revocable Living Trusts”and partially inspired by the song “A Matter of Trust” by Billy Joel. So let’s get into it
The trustee is the individual or entity responsible for managing the trust assets and carrying out the directions of the grantor that are formally expressed in the trust instrument. A trustee is said to be vested with legal title to the trust assets, but must, at all times, act in the best interest of trust beneficiaries.
As such, the trustee is considered to be a fiduciary, a person who has a legal duty to act in the best interest of another as a result of holding a position of trust and confidence. Other individuals and entities considered to be fiduciaries include executors and administrators of decedent’s estates, as well as guardians of minors and incapacitated individuals.
The law imposes several duties to ensure that a fiduciary always acts in the best interests of those he is charged to protect.
Among these duties are:
1. The duty of loyalty.
2. The duty of care.
A trustee must be loyal to the beneficiaries of a trust and must make decisions that are in the best interests of the beneficiaries (and consistent with the terms of the trust) even if those decisions results in a loss to the fiduciary. Furthermore, a trustee owes a duty of care to all beneficiaries, and therefore should make decisions only after engaging in a diligent investigation of the facts and thoughtful consideration of the impact on all the beneficiaries.